The most crucial aspect of making money by using the no-stop hedged Forex trade strategy is being addressed. In the prior articles of this series, we discussed trading with no stops, without worrying about how the price changes and how to make money from profitable transactions. In this article, we’ll demonstrate how you can make a profit selling and buying simultaneously with the grid method.
The hedged, no-stop trading grid for currency follows the principle that one must be in a position to conclude a trade with a profit, regardless of how the market is moving. The only way that this is plausible is if you could have both a buy and a sell transaction running simultaneously. The majority of traders will tell you that this isn’t recommended, but let’s examine the issue in greater detail.
In the case of a grid that has a gap between grids of 100 pip. We’ll make use of the most simple form to demonstrate the fundamentals involved. This can be described as the 100 percent retract pattern where the price moves upwards to the grid line and it then goes back to the grid level at which it started. Unfortunately, things get very mathematical from this point on. We also don’t take into account spreads on brokers to simplify things.
Let’s say traders enter the market through a purchase (buy 1.) or buy (sell 1.) deal that is active when a currency is at a value of, say 1.0100. The price will then rise to the level of 1.0200. The buy is positive by 100 pip. The sale will then be negative by 100 pip. We can now take advantage of our winning deal and deposit 100 pip. However, the sale has a loss of 100 pip. Grid systems require one to make sure that traders can profit from any change on any movement in the Forex market. To accomplish this, one should be able to sign a deal to buy (buy two) and sell (sell 2) deal at this point (level 1.0200).
To make things easier, we will assume that the price rises to a level of 1.0100 (the beginning point).
The second selling (sell 2) has now turned positive by 100 pip and the second purchase (buy 2) has losses of 100 pips. In accordance with the rules of grid trading, you could buy in the sale (sell 2), and then another 100 pips would add to the account. This brings the total of the cash at the time of writing to 200 pip (buy 1, sell 2,). At this point, the first sale that is in effect has gone from 1.0200 at which it was -100 to 1.0100 at which point it is at a point of breaking even.
The 4 transactions, when added together, now show an amazing gain:- 1st purchase (buy 1) that was cashed at +100, second sell (sell 2) cashed in +100, the 1st sell (sell 1) is now at a break point and the second buy (buy 2.) is at -100. This is a total gain of 100 pip on the whole. We could liquidate all transactions and drink champagne since we made a profit of 100 pip.
It is important to understand the math behind the exercises described above. It is possible to read and sketch the motions on a piece of paper to ensure that you comprehend the idea.
This pattern is a 100% retracement pattern in which the price rises to a grid line and then returns to the grid level that it was at which results in a handsome gain for the trader in forex. There are other market fluctuations that transform this odd Buy and Sell at the simultaneous activity into profit. In the next post, we will focus on the 50% retracement pattern which yields the same amount of profit.
There will be more details about the stopless trading system and hedged grid in the coming articles of this directory. Do not overlook the opportunity to use them in whatever you do.
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